If Singapore Airlines is looking in some way to its proposed alliance with Virgin Australia to help overcome the misfortunes of Tiger Airlines, then the public records of the ACCC suggest it may be disappointed.
In a response to a set of questions from the ACCC concerning its intentions in such an alliance, Virgin Australia says bluntly :
“The alliance will have no effect on Virgin Australia’s incentives to compete with Tiger Airways”.
In material provided to the ACCC by Virgin Australia’s law firm, the airline outlines the safety oversight failings of Tiger Airway’s Australian domestic operation, its general unreliability, excessive supplementary charges and a poor value for price outcome despite the cheapness of the fares it had offered before it was grounded as a threat to public safety for five weeks in July and August.
The Virgin Australia responses to the competition authority also provide food for thought for regular travellers who might wonder what airline managements in general are smoking if they think an alliance has a tightly binding effect on the choices made by informed consumers.
This is not just a Virgin Australia issue either. But in its case it is arguing that in order not to confuse customers it is only promoting its code share with Etihad for flights to Europe, via that airline’s Abu Dhabi hub, while emphasising that its code shares with Singapore Airlines are exclusively about serving destination in Asia via connections at Changi Airport.
Oh for goodness sake!
Singapore Airlines has a highly successful franchise in Australia for flights all the way to Europe, and is substituting Virgin Australia flights for Qantas domestic flights for providing the Australian connections to its capital city gateways.
In fact Qantas has already told Singapore Airlines to get lost when it comes to the interline agreement that had applied since soon after Ansett collapsed in 2001. That connecting trade will be a valuable addition for Virgin Australia, but if it really thinks every one of its customers who want to fly to Europe will automatically chose to use Etihad’s connections over Abu Dhabi in preference to those that Singapore Airlines offers at Changi then it must be kidding.
Etihad and Singapore Airlines are highly competitive airlines with much to offer travellers, but the notion that Virgin Australia can ‘edit’ its multiple alliance options to stream its customers exclusively onto one or the other depending on whether they are travelling further to Europe or deeper into Asia is not credible.
It is surprising that Virgin Australia didn’t say so in its submission to the ACCC at the outset, since far from restraining or focusing competition, it could have argued that it was actually greatly expanding or facilitating consumer choice by making it easy to connect to the networks of both Etihad and Singapore Airlines.
The Virgin Australia position, expressed in its letter to the ACCC, is that more choice can confuse travellers.
This is laughable, and reminiscent of the send-up of Steve Jobs announcing an earlier version of OSX during which he sends the Apple acolytes into ecstasy by telling them that by restricting developer access to some parts of its operating platform Macintosh was liberating people from the tyranny of indecision.